Assume that SQ = Standard Quantity, SP = Standard Price, AQ = Actual Quantity, and AP = Actual Price. The correct entry along with the equation to record the issuance and usage of materials, assuming a favorable materials usage variance, is as follows
A) Work in Process SQ * SP
Materials Usage Variance (AQ - SQ )SP.
Materials AQ * SP
B) Work in Process SQ * SP.
Materials Usage Variance (AQ - SQ)SP
Materials AQ * SP,
C) Work in Process AQ * AP
Materials Usage Variance (AQ - SQ)SP
Materials AQ * SP
D) Work in Process AQ * AP
Materials Usage Variance (AQ - SQ)SP.,
Materials AQ * SP
E) None of these.

Question

Quizplus · Accepted Answer

The correct entry for a favorable materials usage variance is to debit Work in Process for the standard quantity at the standard price (SQ * SP), credit Materials for the actual quantity at the standard price (AQ * SP), and record the materials usage variance as a credit if favorable, calculated as (AQ - SQ)SP.

Assume That SQ = Standard Quantity, SP = Standard Price